The Coronavirus Act 2020 prevents Landlords from going to Court to recover rent arrears or from taking back possession of leased commercial property by forfeiture. The restriction on landlord action will end on the 25th March 2022.
What’s happening now with commercial rent arrears?
From the 25th March 2022 Landlords will be able to forfeit Leases for non-payment of rent accruing after the 18th July 2021.
However, for rent arrears relating to the period from March 2020 to 18th July 2021, a special scheme will apply. The Commercial Rent (Coronavirus) Bill, which is due to take effect from the 25th March 2022, will apply to businesses legally required to close/cease trading during this ring-fenced period. Arrears relating to that period will be subject to an arbitration scheme for dealing with commercial rent arrears.
Arbitrators will be able to determine a Tenant’s liability for this relevant period and will be able to grant particular forms of relief from payment if a Tenant produces evidence to prove that their business was not viable during this period.
Key Point – Commercial rent arrears
Any rent arrears which relate to the period outside of March 2022 – 18th July 2021 will remain due and payable, the moratorium which has prevented Landlords from taking action will no longer be there to protect Tenants after 25th March 2022.
Tenants should therefore be urgently negotiating with their Landlords to seek to agree on terms for the repayment of these arrears.
As for the moratorium period itself, this was not a rent-free period and rent remains due from Tenants. The compulsory arbitration scheme must be followed before action can be taken in respect of any arrears relating to the moratorium period.
In practice, it will make sense for Landlords and Tenants to negotiate directly without the involvement of an arbitrator (which is likely to be expensive) to agree to the Tenant’s liability and put in place a schedule for repayment of the agreed arrears.
If you would like help recovering unpaid commercial rent please contact Attwells Solicitors on 01473 229200 or on 01206 766333.